[compilation video of homeless mother of 3 and CVS kid]
Student loans are a horrible byproduct of university… period! But most of us are encouraged into this kind of debt arrangement as a way to invest in our future. If you yourself have taken the plunge and are stuck in a huge mire of student loan debt there are simple ways for you to severely lessen the financial burden. The very first thing to do is make periodic checks with your loan company to see if they can lower the rate. Be sure to start this habit even before you graduate because the newer the loan the more of a chance your rate has of getting changed. Your loan company needs to make money on the interest so losing you as a customer is very bad for business. This advice seems simple but it’s rarely done. You should know that since student loan rates are based on a fluctuating index, there is sometimes wiggle room for you to do better.
The next thing you should consider is the fact that paying off large chunks of your loan ahead of schedule is the best strategy for your financial freedom. Let’s say you get a bonus at work and pay a year off the term of the loan. This means that for the next year YOU PAY NO INTEREST. Get it? Paying ahead will save you big off the full term of the loan, especially at the beginning. So if you’ve chosen the right major you’ll be able to pay off your debt so quickly that your interest will have a negligible impact on the total balance.
If you can’t afford to pay off big chunks of your debt, this next step is something you need to be aggressive about. Search out other lenders who will refinance your debt. But before you initiate the process, you need to contact your first lender to find out how much interest you will be paying throughout the term of the original loan. YOU NEED TO DO THIS because a refinancing fee might negate the benefit of changing lenders. If you believe that you will come out ahead even after rolling in the balance transfer fee, make sure that the savings will be significant. This means don’t settle for just a couple hundred dollars off the term of the loan because you only want to refinance once and forget about it. Refinancing twice means that you’ll paying the balance transfer fee twice.
Unfortunately, none of us are immune to crises so seasons do arise when it is difficult to make monthly payments. Most of us can pivot out of this situation with just a few scars on our credit. However, a small portion cannot and ultimately seek out bankruptcy protection. It’s important to know that a student loan is not classified as debt that can be written off through a typical Chapter 7 bankruptcy. So if you do choose to file for bankruptcy you must file Chapter 11 if you want to include you student loans. With this form of bankruptcy, all of your debts are rolled into one payment program after settling for a much lower balance. Typically, the monthly payments are so big that there’s little chance you’ll be saving anything from your paychecks and your payment term may last up to 3 years. And if you fail to miss payments your lenders may come back at you with litigation. So as you can see, BANKRUPTCY IS NOT A GOOD OPTION if you are in over your head with student loan debt. With this information in mind, you must adopt a sober stance when deciding whether to take out a student loan and your adherence to the loan agreement must be as solid as your resolve to go to school and graduate.
The young woman in the video clip fell into debt by going to school full time then ultimately became homeless. She says that she is doing much better and would like to go to school again. It’s important to say that if her balance of $10,000 is from a FAFSA school loan, she can file a request to bring her payments to $0/month based on a low income test. If a long time passes of having substantially low income, her entire debt may be forgiven. The rules are purposely vague about how much time needs to pass though. In the young woman’s situation continuing to make payments may be the better option because she says she wants to go back to school. This would be less likely to happen if her current loan goes through years of default and is then written off. Debt consolidation or debt settlement would also complicate her aspirations of getting a degree.
With the second clip I was surprised that the young man could hold two drinks for so long without telling me to get lost. Maybe it was because he needed to get his issue of student debt off his chest. He went to technical school and took out a $11,000 loan to do so. Half way through he decided that the investment wasn’t worth the degree and is now working at CVS as he moves toward becoming an entrepreneur. Paying the bills is not an easy thing to do for a kid making minimum wage. So like the mother in the first clip, maybe he could qualify for debt forgiveness. If not, debt consolidation or debt settlement could be an option, however derogatory they may seem on his credit report.